Positive Cash Flow Duplex

[Jared Skov]

Hey guys, my wife and I️ recently purchased a duplex with 25% down. The owner we bought from is older and needing money for health issues, so she’s liquidating all her assets. Unit A tenant has been there for 7 years and has never missed a payment, Unit B tenant has been there for 16 years and never missed a payment. We are cash flow positive $250/mo, but rent could be raised $200 per side to match comps. Do we risk driving out good tenants right out of the gates for an extra $4800/yr? Maybe increase $50 per side or wait a year to increase? We’re their new landlords, so they probably expect some sort of increase right? Any suggestions are much appreciated. Thanks!

[Jon Holdman]

How much are the current rents?  Going from $400 to $600 is likely to produce a much stronger reaction than from $2000 to $2200.

What's the demand like?  If the existing tenants move and you can quickly fill the vacancy you're better off than if you have a long vacancy.

What work will be needed?  Work is always needed when you have a turnover.  After seven years you probably need extensive work and after 16 its probably a full remodel.   Don't make the mistake of comparing your dated and used units to recently updated ones when determining rent.  Honestly given the length of occupancy I'd expect to spend $10K or more to update these units.